Modern businesses are dependent on highly complex, often globalized supply chains. Supply chains often experience disruptions, which you might not see coming without adequate preparation. If you lose access to the necessary finished goods or materials, you could quickly find it harder — or even impossible — to get products to your customers on time.
Because these supply chains are so intricate, however, many businesses don’t know where their raw materials and products come from beyond their immediate vendor or supplier. As a result, they’re often vulnerable to supply chain disruptions.
With the right steps, you can audit and strengthen your supply chain and stay afloat, even during a crisis.
The Importance of the Supply Chain to E-Commerce
The supply chain disruption that followed in the wake of COVID-19 caught a huge number of e-commerce businesses off guard. As quarantines in China took effect, the country saw its manufacturing levels dip to the lowest they’d been since 2005. Even as consumer demand ramped up and e-commerce became more popular than ever, these companies quickly faced major delays as factories and suppliers closed shop temporarily.
Not every business struggled in the same way. Those that audited their supply chain, investigating suppliers for possible vulnerabilities and identifying alternatives, often had contingency plans in place. Or, they pivoted to working with vendors who weren’t blindsided by the pandemic. As a result, they were much better equipped to continue working through the crisis and effectively handle the increased demand.
Novartis, for example, is an international pharmaceutical manufacturer that managed the disruption in part due to the company’s business continuity and pandemic response plans. These called for a stock of critical inventory and multiple supply points.
Supply chain disruptions often seem like big, world-shifting events to the companies they affect. In actuality, major interruptions are common. Hurricanes, earthquakes, floods, and even volcanoes are all examples of incidents that can temporarily halt production, making some orders hard or impossible to fill. It’s possible, and even critical, to prepare for these disruptions, but only with the right strategies.
How Businesses Can Prepare for Supply Chain Disruptions
For many e-commerce businesses, the supply chain is fairly opaque and non-flexible. They may be in regular contact with immediate suppliers but may not be on top of vendors further back in the chain.
To prepare for disruptions, companies need to increase their knowledge of the supply chain and improve the flexibility and agility of their operations. You can start by keeping in touch with your vendors and making sure both you and your suppliers have emergency response plans in place. Ask for copies of these policies, if possible, and see if your vendor is performing due diligence.
For example, does your manufacturer have a plan in place for inspecting and repairing equipment after a major weather event? Conveyor belts, which are standard and essential factory machinery, can easily fail without proper maintenance due to residue buildup, shifting components, or wear and tear. If your manufacturer doesn’t have a plan to maintain their equipment after a crisis, you may find your supply chain impacted after machinery fails — or even beforehand.
Data is key to improving your business’s supply chain process, and knowing exactly where your products and raw materials come from is a great start. A supply chain audit — a review of your vendors, the suppliers they rely on, and potential threats to the supply chain — is where many brands begin.
This audit, combined with supply chain mapping or other in-depth investigation techniques, can provide you with a clear idea of where your products and raw materials come from. You’ll also learn of the potential vulnerabilities you may face.
Dealing With Supply Chain Weaknesses
Once you have an idea of how your supply chain is truly organized, you can begin tackling weaknesses in it.
Diversifying your supply and product sources can help. Often, supply chain disruptions are localized and only damage a specific area or valuable transit hub. Having backups in place and establishing relationships with other vendors before an interruption hits can help you ensure some work continuity, even if your main supplier is knocked offline.
For businesses that rely on goods manufactured in-house, this may mean looking for multiple sources of raw materials. For companies that rely on manufacturers, it may mean looking at alternatives to the products you currently sell.
These processes won’t necessarily be quick or cheap. The transparency and clarity they provide, however, are essential in building a more robust and responsible supply chain.
Improving Supply Chain Agility and Resilience
Every e-commerce business is dependent on the supply chain — and for many, that means relying on an opaque and inflexible system. In a crisis, supply chain disruptions can be hard to cope with if you haven’t made the right preparations.
Better supply chain data and processes can help e-commerce businesses weather disruptions. By identifying vulnerabilities and preparing for crises, you can know which vendors are likely to be affected and have alternatives already in place.